AB Bank Ltd. signed a Master Facility Agreement under 'Investment Promotion and Financing Facility (IPFF)' with Bangladesh Bank (BB) at Bangladesh Bank’s head office on Wednesday, says a press release.

AB Bank president and managing director Kaiser A Chowdhury and Bangladesh Bank executive director S K Sur Chowdhury signed the agreement.

M Fazlur Rahman, additional managing director, Mahmudul Alam, head of structured finance, Kazi Nasim Ahmed, vice-president of AB Bank and Husne Ara Shikha, joint director and deputy project director, Goutam Kumar Ghosh, deputy director, IPFF Cell, Bangladesh Bank and other officials of both the organisations were present.

Under the agreement, AB Bank will enjoy financing facility from the World Bank, administered by the Bangladesh Bank, for extending credit facilities to such infrastructure projects.

The government has taken the IPFF project to make available partial debt financing through private sector financial intermediaries for eligible, government-endorsed infrastructure projects, to be developed by the private sector. Projects developed solely by the private sector but identified by the government to be in the public interest will also be eligible to get financing under IPFF.

Source: The Independent/ Bangladesh/ 15th Dec 2011

Mutual Trust Bank Limited (MTB) on Wednesday launched a branch and an ATM (Automated Teller Machine) booth at Bashundhara Residential Area in the city.

Chairman of the Bashundhara Group Ahmed Akbar Sobhan inaugurated the bank’s 74th branch and 57th ATM booth as chief guest.

The new branch and ATM are located at B-block, Road- 2.

Three directors of MTB MA Rauf, Wakil Ahmed and Mahboob Morshed Hasan, managing director Anis A Khan and manager for new branch Mustafizur Rahman were also present at the inaugural function.

Anis A Khan said the bank is expected to open two more branches this month- one at Uttara in the city and another in Brahmanbaria.

He said MTB launched two subsidiary companies- MTB Securities Limited and MTB Capital Limited this year.

The bank also opened a branch in London which is also doing well, MD added.

Anis Khan said: “Like other MTB branches, the new branch in Bashundhara is also committed to serve its best to the customers.”

Source: The Daily Sun/ Bangladesh/ 15th Dec 2011

Bangladesh Bank has been suffering from acute shortage of manpower which is assumed to hamper the central bank’s monitoring and supervision on the large number of financial institutions of the country, experts said.

Concerned sources said a total of 387 posts of assistant directors and more than 1000 posts of class II officers are currently vacant at Bangladesh Bank.

Sources at the Human Resources Department (HRD) of the central bank said the recruitment of 100 assistant directors is currently under process, but staffing in class II positions remained closed since 2003.

Highly placed source at the HR department informed that the recruitment of class II officers remained closed since the World Bank suggested the central bank authorities to recruit more class I officers instead of class II employees.

AKM Mohiuddin Azad, acting general manager of the human resources department of Bangladesh Bank, said as per the bank’s requirement, many posts have been created in various departments several times, but filling up the vacant positions has become very hard due to various constraints.

Moreover, on an average 150 officers at different levels go on retirement every year, creating new vacuum at the bank, he added.

Arif Hossain Khan, joint director at the BB’s recruitment wing, told daily sun that the workload at the central bank has increased four to five times over the years but the manpower has not increased accordingly.

Experts feel that the quantity of job positions in different departments of Bangladesh Bank was created long back when there were only 13 to 15 banks in the country, but currently the context has totally changed. The number of scheduled banks and non-banking financial institutes has increased manifold and supervision of all the financial institutions has become so hard for Bangladesh Bank.

On an average, the commercial banks open more than 100 branches each year, so time has come to reassess the numbers of posts in the important departments in the central bank, keeping the existing banking scenario actively in consideration, experts opined.

Sources at the central bank’s recruitment wing said the recruitment process of 100 assistant directors (general) six officers in research wing, 13 assistant directors (statistics), 13 officers in computer program and maintenance department, seven medical officers, and some other officials in cash department are underway.

The central bank will publish another job advertisement next week to appoint more assistant directors (general side), sources said.

Source: The Daily Sun/ Bangladesh/ 15th Dec 2011

The government’s bank borrowing last week came down significantly from its peak as a big amount of fund was added to the national exchequer from the telecom sector.

Public borrowing from banks, especially from the central bank, declined to nearly Tk 168.48 billion on Monday, from its peak of Tk 198.05 billion at the end of November this year, a recent BB data showed.

The telecom sector added Tk 32 billion to the state coffer on December 8, from which public expenditure and bank dues repayments were made.

The situation may improve further when some donor-pledged funds, including that of the World Bank, are disbursed, officials say.

In the first five months of the current fiscal year, the government surpassed its yearly borrowing target of Tk 189.57 billion because of a major mismatch between its income and huge expenditure.

The huge public borrowing left the banking sector in a huge liquidity crunch, also shooting up inter-bank call money rate.

In the same period a year earlier, the government borrowed Tk 21.72 billion only.

Public expenditure skyrocketed in the recent months because of increased import of capital machinery and fuel oil for supplying to rental power plants. The government’s revenue decreased due to sluggish remittance inflow, delay in fund disbursement from donors and lower sale of saving certificates, officials said.

However, in the first week of this month, the government did not borrow any money from banks.

Earlier, economic analysts feared that the government might not be able to keep its bank borrowing limit within the 5 percent of GDP as projected in this year’s budget. They also warned of an inflationary pressure due to heavy bank borrowing.

Source: The Daily Sun/ Bangladesh/ 15th Dec 2011

In an effort to reduce dependence on borrowing from the banking sector, the government plans to increase interest rates on savings instruments again amid a fall in sales of such instruments.

The rates of interest on three-year and five-year savings instruments are likely to be hiked by around 1 percentage point to 11.50 percent and 12.50 percent respectively.

The present rates of interest that came into being in July are 10.78 percent for the three-year instrument and 11.55 percent for the five-year one.

An official of the Internal Resource Division said a proposal in this regard may be sent to the government soon.

The official also said, as the sales of savings instruments fell drastically, the Directorate of National Savings (DNS) earlier sent similar proposals several times but the government adopted a go-slow policy. But now the government is actively considering a rise in the rates of interest to reduce pressure of borrowing on the central bank.

However, a finance ministry official said, if the government borrows more through savings instruments, its expenditure on payment of interest will go up in future. But now the government's main concern is soaring inflation, said the official.

As the sales of savings instruments fell last fiscal year, the rate of interest on all types of instruments were increased by about 1 percentage point on July 1.

A DNS official said, alongside a fall in the sales of fresh savings instruments in recent times, the savers are encashing their savings instruments and depositing the money with banks as they offer higher interest.

According to DNS statistics, in the first four months of the current fiscal year the sales of the savings instruments fell by 10 percent compared to the same period last year.

The principal amount repayment in the same period rose by around 16 percent.

In the current fiscal year's budget, the government set a target of borrowing Tk 6,000 crore from the sales of savings instruments.

But in the first four months of the current fiscal year, net sales or borrowing through the savings instruments fell by around 77 percent over the last year, and the borrowing stood at only Tk 592 crore.

In the same period last year, the government's net borrowing was at Tk 2,604 crore.

The finance ministry official said the situation has become such that the government is now compelled to borrow from the banking system to pay the principal amount and interest accrued on the savings instruments bought earlier.

In case of borrowing from banks, the situation is opposite.

In the first five months of the current fiscal year, the amount of government's borrowing from banks reached Tk 19,805 crore, which was around Tk 1,000 crore more than its borrowing target for the entire year.

The ministry official said the pressure of expenditure has fuelled the government's bank borrowing every week.

Normally such borrowing rises at the end of the fiscal year when expenditure on annual development programme goes up.

But in the current fiscal year, the amount of borrowing, especially from the central bank, has been on the rise from the beginning of the year, leading a hike in inflation.

However, bank borrowing fell slightly in December, at a time when a mission of International Monetary Fund was staying in Dhaka to talk with the government about a loan.

The visiting IMF mission expressed concern about the heavy bank borrowing and advised the government to bring the amount down.

On December 12, the amount of government's borrowing was Tk 16,848 crore of which Tk 10,365 crore was from the central bank.

The DNS official said the banks, especially the private ones, have increased their deposit rate much in recent times -- up to 12 percent,

On October 6, the overall deposit growth in all the banks was 13.86 percent compared to December 31 last year. Of the growth, the private banks' deposit rose by 16 percent and that of foreign banks by 19 percent.

Deposit growth in many of the private and foreign banks was 22-36 percent during the period.

Source: The Daily Star/ Bangladesh/ 15th Dec 2011